Back to GetFilings.com
Page 1 of 21
Form 10-Q
U. S. Securities and Exchange Commission
Washington, DC 20549
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 2003.
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ______________ to ______________
Commission File No. 000-18445
Benchmark Bankshares, Inc.
(Name of Small Business Issuer in its Charter)
Virginia 54-1460991
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
Incorporation or Organization)
100 South Broad Street
Kenbridge, Virginia 23944
(Address of Principal Executive Offices)
Issuer's Telephone Number: (434) 676-9054
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes [X] No [ ] (2) Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [ ] No[X]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest applicable date:
2,959,718.057
Page 2 of 21
Form 10-Q
Benchmark Bankshares, Inc.
Part I - Table of Contents
March 31, 2003
Part I Financial Information
Item 1 Consolidated Balance Sheet
Consolidated Statement of Income
Condensed Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3 Quantitative and Qualitative Disclosures about Market Risk
Part II Other Information
Page 3 of 21
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Balance Sheet
(Unaudited) (Audited)
March 31, December 31,
2003 2002
---- ----
Assets
Cash and due from banks $ 11,668,755 $ 13,340,576
Securities
Mortgage backed securities 15,396,660 11,213,510
State and municipal obligations 16,417,199 16,069,446
Other securities 195,490 195,490
Federal funds sold 24,708,000 17,255,000
Loans 198,227,873 198,255,665
Less
Allowance for loan losses (1,982,281) (1,982,559)
--------------- ----------------
Net Loans 196,245,592 196,273,106
Premises and equipment - net 4,423,479 4,285,102
Accrued interest receivable 1,442,946 1,292,070
Deferred income taxes 219,876 195,611
Other real estate 549,138 502,734
Cash value life insurance 3,670,258 3,632,755
Other assets 828,043 802,744
----------------- ----------------
Total Assets $275,765,436 $265,058,144
============== ==============
Page 4 of 21
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Balance Sheet
(Unaudited) (Audited)
March 31, December 31,
2003 2002
---- ----
Liabilities and Stockholders' Equity
Deposits
Demand (noninterest-bearing) $25,322,632 $26,372,882
NOW accounts 24,056,201 23,258,069
Money market accounts 20,901,301 17,394,138
Savings 14,163,395 13,347,995
Time, $100,000 and over 39,896,921 37,329,668
Other time 122,338,684 118,841,688
-------------- --------------
Total Deposits 246,679,134 236,544,440
Accrued interest payable 796,019 803,167
Accrued income tax payable 362,509 32,516
Dividends payable - 593,088
Other liabilities 695,480 539,026
-------------- ---------------
Total Liabilities 248,533,142 238,512,237
Stockholders Equity
Common stock, par value $.21 per share,
authorized 4,000,000 shares; issued
and outstanding 03-31-03 2,959,718.057,
issued and outstanding 12-31-02
2,962,234.049 shares 621,541 623,164
Capital surplus 3,876,736 4,005,238
Retained earnings 22,062,299 21,215,858
Unrealized security gains net of tax effect 671,718 701,647
---------------- --------------
Total Stockholders' Equity 27,232,294 26,545,907
----------------- --------------
Total Liabilities and
Stockholders' Equity $275,765,436 $265,058,144
============== ==============
Note: The balance sheet at December 31, 2002 has been derived from the audited
financial statements at that date.
See notes to consolidated financial statements.
Page 5 of 21
Form 10-Q
Benchmark Bankshares, Inc.
Consolidated Statement of Income
(Unaudited)
Three Months Ended March 31,
2003 2002
---- ----
Interest Income
Interest and fees on loans $3,830,672 $3,717,586
Interest on U. S. Government obligations 152,913 250,934
Interest on State and municipal obligations 174,401 197,765
Interest on Federal funds sold 54,543 32,794
-------------- ------------
Total Interest Income 4,212,529 4,199,079
Interest Expense
Interest on deposits 1,689,006 1,941,403
Net Interest Income 2,523,523 2,257,676
Provision for Loan Losses 29,984 185,666
--------------- ------------
Net Interest Income After Provision 2,493,539 2,072,010
Noninterest Income
Service charges, commissions, and fees on
deposits 191,091 134,318
Other operating income 112,483 60,852
Gains on sale of other real estate 955 13,852
Dividends 7,800 6,000
--------------- ------------
Total Noninterest Income 312,329 215,022
Noninterest Expense
Salaries and wages 798,200 750,910
Employee benefits 241,313 187,160
Occupancy expenses 98,383 82,461
Furniture and equipment expense 102,406 80,967
Other operating expenses 365,465 202,012
--------------- ------------
Total Noninterest Expense 1,605,767 1,303,510
--------------- ------------
Net Income Before Taxes 1,200,101 983,522
Income Taxes 353,662 279,473
--------------- ------------
Net Income $ 846,439 $ 704,049
=============== ===========
Net Income per Share $ 0.29 $ 0.24
=============== ===========
See notes to consolidated financial statements.
Page 6 of 21
Form 10-Q
Benchmark Bankshares, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended March 31,
2003 2002
---- ----
Cash Provided by Operating Activities $1,174,837 $ 964,573
Cash Provided by Financing Activities
Net (decrease) in demand deposits and
interest-bearing transaction accounts (252,118) (4,453,530)
Net increase in savings and money market
deposits 4,322,563 5,898,662
Net increase (decrease) in certificates
of deposit 6,064,249 (4,620,727)
Decrease in dividends payable (594,526) (534,600)
Sale of stock 38,940 7,749
Purchase of stock (169,065) (140,083)
--------- ---------
Total Cash Provided (Used) by Financing
Activities 9,410,043 (3,842,529)
Cash Used in Investing Activities
Purchase of securities (7,012,274) (509,913)
Maturity (Call) of securities 2,436,023 1,425,576
Net (increase) decrease in loans 27,792 (6,531,351)
Purchase of premises and equipment (255,242) (29,255)
--------- --------
Total Cash (Used) by Investing Activities (4,803,701) (5,644,943)
--------- ----------
Increase (Decrease) in Cash and
Cash Equivalents $5,781,179 $(8,522,899)
============= ===============
See notes to consolidated financial statements.
Page 7 of 21
Form 10-Q
Benchmark Bankshares, Inc.
Notes to Consolidated Financial Statements
March 31, 2003
1. Basis of Presentation
The accompanying consolidated financial statements and related
notes of Benchmark Bankshares, Inc. and its subsidiary, Benchmark
Community Bank, were prepared by management, which has the primary
responsibility for the integrity of the financial information. The
statements have been prepared in conformity with generally accepted
accounting principles appropriate in the circumstances and include
amounts that are based on management's best estimates and judgments.
In meeting its responsibilities for the accuracy of its
financial statements, management relies on the Company's internal
accounting controls. The system provides reasonable assurances that
assets are safeguarded and transactions are recorded to permit the
preparation of appropriate financial information.
The interim period financial information included herein is
unaudited; however, such information reflects all adjustments
(consisting solely of normal recurring adjustments), which are, in the
opinion of management, necessary to a fair presentation of financial
position, results of operation, and changes in financial position for
the interim periods herein reported.
2. Significant Accounting Policies and Practices
The accounting policies and practices of Benchmark Bankshares,
Inc. conform to generally accepted accounting principles and general
practice within the banking industry. Certain of the more significant
policies and practices follow:
(a) Consolidated Financial Statements. The consolidated financial
statements of Benchmark Bankshares, Inc. and its wholly owned
subsidiary, Benchmark Community Bank, include the accounts of
both companies. All material inter-company balances and
transactions have been eliminated in consolidation.
(b) Use of Estimates in Preparation of Financial Statements. The
preparation of the accompanying combined financial statements
in conformity with generally accepted accounting principles
requires management to make certain estimates and assumptions
that directly affect the results of reported assets,
liabilities, revenue, and expenses. Actual results may differ
from these estimates.
(c) Cash and Cash Equivalents. The term cash as used in the
Condensed Consolidated Statement of Cash Flows refers to
all cash and cash equivalent investments. For purposes of the
statement, Federal funds sold, which have a one day
maturity, are classified as cash equivalents.
Page 8 of 21
(d) Investment Securities. Pursuant to guidelines established in
FAS 115, the Company has elected to classify a portion of
its current portfolio as securities available-for-sale.
This category refers to investments that are not
actively traded but are not anticipated by management to be
held-to-maturity. Typically, these types of investments
will be utilized by management to meet short-term
asset/liability management needs. The remainder of the
portfolio is classified as held-to-maturity. This category
refers to investments that are anticipated by management to be
held until they mature.
For purposes of financial statement reporting, securities
classified as available-for-sale are to be reported at fair
market value (net of any tax effect) as of the date of the
statements; however, unrealized holding gains or losses are
to be excluded from earnings and reported as a net amount in
a separate component of stockholders' equity until realized.
Securities classified as held-to-maturity are recorded at
cost. The resulting book value ignores the impact of current
market trends.
(e) Loans. Interest on loans is computed by methods which
generally result in level rates of return on principal
amounts outstanding (simple interest). Loan fees and related
costs are recognized as income and expense in the year
the fees are charged and costs incurred.
(f) Allowance for Loan Losses. The allowance for loan losses is
increased by provisions charged to expense and decreased by
loan losses net of recoveries. The provision for loan losses
is based on the Bank's loan loss experience and management's
detailed review of the loan portfolio which considers economic
conditions, prior loan loss experience, and other factors
affecting the collectivity of loans. Accrual of interest is
discontinued on loans past due 90 days or more when collateral
is inadequate to cover principal and interest or, immediately,
if management believes, after considering economic and
business conditions and collection efforts, that the
borrower's financial condition is such that collection is
doubtful.
(g) Premises and Equipment. Premises and equipment are stated at
cost less accumulated depreciation. Depreciation is computed
generally by the straight line basis over the estimated useful
lives of the assets. Additions to premises and equipment and
major betterments and replacements are added to the accounts
at cost. Maintenance and repairs and minor replacements are
expensed as incurred. Gains and losses on dispositions are
reflected in current earnings.
(h) Other Real Estate. As a normal course of business, the Bank
periodically has to foreclose on property used as collateral
on nonperforming loans. The assets are recorded at cost plus
capital improvement cost.
(i) Depreciation. For financial reporting, property and equipment
are depreciated using the straight line method; for income tax
reporting, depreciation is computed using statutory
accelerated methods. Leasehold improvements are amortized on
the straight line method over the estimated useful lives of
the improvements. Income taxes in the accompanying financial
statements reflect the depreciation method used for financial
reporting and, accordingly, include a provision for the
deferred income tax effect of depreciation which will be
recognized in different periods for income tax reporting.
Page 9 of 21
(j) Earnings Per Share
Earnings per share were computed by using the average shares
outstanding for each period presented. The 2003 average shares
have been adjusted to reflect the buy back of 13,000 shares of
common stock by the company and the sale of 5,275 shares of
the Company's common stock through the employee stock option
plan during the first three months of 2003. The 2002 average
shares have been adjusted to reflect the sale of 1,225.495
shares through the employee stock option plan at various dates
during the period and the retirement of 28,504 shares. The
average shares of outstanding stock for the first three months
of 2003 and 2002 were 2,963,917.372 shares and 2,959,691.181
shares, respectively.
As of March 31, 2003, Benchmark Bankshares, Inc. offers stock
to employees and directors under two separate incentive stock
plans. Based on current trading values of the stock, the stock
options are not considered materially dilutive; therefore, the
Company's earnings per share are reported as a simple capital
structure.
(k) Income Taxes. The table below reflects the components of
the Net Deferred Tax Asset account as of March 31, 2003:
Deferred Tax Assets
Resulting from
Loan loss reserves $567,221
Deferred compensation 127,874
BOLI 27,890
Deferred Tax Liabilities
Resulting from
Depreciation (157,073)
Unrealized securities gains (346,036)
-----------
Net Deferred Tax Asset $219,876
=========
(l) Comprehensive Income. The only component of other
comprehensive income in the Company's operation relates to
unrealized security gains and losses in the bond portfolio.
The Company has elected to report this activity in the equity
section of the financial statements rather than the Statement
of Income. Due to the fact that this condensed filing does not
include a Statement of Equity, the following table is
presented to reflect the activity in Comprehensive Income:
Three Month Period
Ending March 31,
2003 2002
Net Income $846,439 $704,049
Other Comprehensive Income-
Net Unrealized Holding
(Losses) Arising During Period (45,347) (51,864)
-------- --------
Comprehensive Income $801,092 $652,185
========== =========
Page 10 of 21
Selected Quarterly Data
(Unaudited)
2003 2002 2002 2002
First Fourth Third Second
Quarter Quarter Quarter Quarter
Net Interest Income $2,523,523 $2,549,729 $2,510,411 $2,528,335
Provision for Loan Losses 29,984 116,031 24,512 92,373
Noninterest Income 312,329 402,139 474,061 304,107
Noninterest Expense 1,605,767 1,623,687 1,626,874 1,530,908
Income Before Extraordinary
Item and Cumulative Effect
of Change in Accounting
Principle 846,439 905,154 936,699 852,138
Net Income 846,439 905,154 936,699 852,138
Per Share $ 0.29 $ 0.29 $ 0.31 $ 0.29
2002 2001 2001 2001
First Fourth Third Second
Quarter Quarter Quarter Quarter
Net Interest Income $2,257,676 $2,217,110 $2,136,736 $2,142,230
Provision for Loan Losses 185,666 67,953 34,128 33,027
Noninterest Income 215,022 234,848 296,300 271,885
Noninterest Expense 1,303,510 1,405,484 1,458,664 1,394,504
Income Before Extraordinary
Item and Cumulative Effect
of Change in Accounting
Principle 704,049 693,786 680,092 681,381
Net Income 704,049 693,786 680,092 681,381
Per Share $ 0.24 $ 0.24 $ 0.22 $ 0.23
Page 11 of 21
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following is management's discussion and analysis of
certain factors which have affected the Company's financial position
and operating results during the periods included in the accompanying
condensed financial statements.
FIRST QUARTER 2003
Earnings Summary
Net income of $846,439 for the first quarter of 2003 increased
$142,390, or 20.22% as compared to net income of $704,049 earned during
the first quarter of 2002. Earnings per share of $0.29 as of
March 31, 2003 also increased from the March 31, 2002 level of $0.24.
The annualized return on average assets of 1.25% and annualized return
on average equity of 12.59% increased from 1.17% and 11.86%,
respectively, when comparing the first three months of 2003 to the
first three months of 2002.
The increase in earnings resulted from several factors.
Although net interest income increased by only $13,450, total
noninterest income increased by $97,307 when compared to one year ago.
The combination of a $252,397 decrease in interest expense and a
$155,682 decrease in the provision for loan losses improved overall
profitability and offset a $302,257 increase in noninterest expense.
Interest Income and Interest Expense
Total interest income of $4,212,529 for the first quarter of
2003 increased $13,450 or 0.32% over interest income of $4,199,079
recorded during the first quarter of 2002. Although the bank earned
$99,636 less on investment securities, including federal funds sold,
a $113,086 increase in interest and fees on loans served to offset this
decline.
Total interest expense in the first quarter of 2003 amounted to
$1,689,006, reflecting a decrease of $252,397, or 13.00%, from the
level reached during the first quarter of 2002. This decrease is a
result of low interest rates, which remained at record-low levels
during the quarter.
Provision for Loan Losses
During the first quarter of 2003, the loan loss reserve
decreased by $278 to a level of $1,982,281, or 1.00%, of the
outstanding loan balance. The decrease was a result of a slight decline
in total loans during the quarter.
At year end 2002, the reserve level amounted to $1,982,559,
or 1.00%, of the outstanding loan balance net of unearned interest.
Nonperforming Loans
Nonperforming loans consist of loans that are either 90 days
or more past due or accounted for on a non-accrual basis. Loans
classified as non-accrual no longer earn interest and payment in full
of principal or interest is not expected.
As of March 31, 2003, the Bank had a total of $970,372,
or 0.49%, of the total loan portfolio, classified as nonperforming
loans, with $208,268 of this amount accounted for on a non-accrual
basis.
Noninterest Income and Noninterest Expense
Noninterest income of $312,329 increased $97,307, or 45.25%,
for the first quarter of 2003 as compared to $215,022 earned during the
first quarter of 2002. The increase primarily resulted from an increase
in both service charges and other operating income that resulted from
the Bank's strong deposit growth and the opening of a new branch
location in Blackstone.
Page 12 of 21
Noninterest expense of $1,605,767 increased $302,257, or
23.19%, for the first quarter of 2003 as compared to the level of
$1,303,510 reached during the first quarter of 2002. Salaries and
benefits expenses accounted for $101,443 of the difference, while other
operating expenses, primarily resulting from the opening of a new
branch location, accounted for the balance of the increase.
Off-Balance-Sheet Instruments/Credit Concentrations
The Company is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. Unless noted otherwise, the Company
does not require collateral or other security to support these
financial instruments. Standby letters of credit are conditional
commitments issued by the Company to guarantee the performance of a
customer to a third party. Those guarantees are primarily issued to
facilitate the transaction of business between these parties where the
exact financial amount of the transaction is unknown, but a limit can
be projected. The credit risk involved in issuing letters of credit
it is essentially the same as that involved in extending loan
facilities to customers. There is a fee charged for this service.
As of March 31, 2003, the Bank had $1,083,607 in outstanding
letters of credit. This represents a $68,449, or 5.94%, decrease from
the December 31, 2002 level. These instruments are based on the
financial strength of the customer and the existing relationship
between the Company and the customer. The maturities of these
instruments are as follows:
March 31,
2004 $ 883,363
2005 200,244
Liquidity
As of March 31, 2003, $62,808,592, or 31.69%, of gross loans
will mature or are subject to repricing within one year. These loans
are funded in part by $39,896,921 in certificates of deposit of
$100,000 or more of which $21,647,663 mature in one year or less.
With a total of $85,011,258 in certificates of deposit and
$1,265,134 in investment securities maturing within the next year, the
Bank has a maturity average ratio for the next twelve months of 104.44%
when comparing earning asset and certificate of deposit maturities.
At year end 2002, $59,441,000, or 29.99%, of gross loans were
scheduled to mature or were subject to repricing within one year and
$86,594,000 in certificates of deposit were scheduled to mature during
the same period.
Capital Adequacy
Total stockholder equity was $27,232,294, or 9.88%, of total
assets as of March 31, 2003. This compared to $26,545,907, or 10.02%,
of total assets as of December 31, 2002.
Primary capital (stockholders'equity plus loan loss reserves)
of $29,214, 575 represents 10.59% of total assets as of March 31, 2003.
As of December 31, 2002, primary capital was $28,528,466, or 10.76%,
of total assets.
Page 13 of 21
A strong growth in deposits resulted in increased assets;
however, loan demand did not keep pace with deposit growth. This
imbalance resulted in a declining loan to deposit ratio over the first
quarter. The decline resulted in additional funds being placed in lower
earning investment accounts versus higher yielding loans.
This decreasing rate of earnings from the current asset
portfolio mix resulted in the lower earnings and less earnings
retention. Consequently the equity ratios declined. Although the Bank
experienced a slight decrease in the ratios, the overall equity
position remained stable.
Page 14 of 21
Item 3 Quantitative and Qualitative Disclosures about Market Risk
Through the nature of the banking industry, market risk is
inherent in the Company's operation. A majority of the business is
built around financial products, which are sensitive to changes
in market rates. Such products, categorized as loans, investments, and
deposits are utilized to transfer financial resources. These products
have varying maturities, however, and this provides an opportunity to
match assets and liabilities so as to offset a portion of the market
risk.
Management follows an operating strategy that limits the
interest rate risk by offering only shorter-term products that
typically have a term of no more than five years. By effectively
matching the maturities of inflows and outflows, management feels it
can effectively limit the amount of exposure that is inherent in its
financial portfolio.
As a separate issue, there is also the inherent risk of loss
related to loans and investments. The impact of loss through default
has been considered by management through the utilization of an
aggressive loan loss reserve policy and a conservative investment
policy that limits investments to higher quality issues; therefore,
only the risk of interest rate variations is considered in the
following analysis.
The Company does not currently utilize derivatives as part
of its investment strategy.
The tables below present principal amounts of cash flow as it
relates to the major financial components of the Company's balance
sheet. The cash flow totals represent the amount that will be generated
over the life of the product at its stated interest rate. The present
value discount is then applied to the cash flow stream at the current
market rate for the instrument to determine the current value of the
individual category. Through this two-tiered analysis, management has
attempted to measure the impact not only of a rate change, but also the
value at risk in each financial product category. Only financial
instruments that do not have price adjustment capabilities are herein
presented.
In Table One, the cash flows are spread over the life of the
financial products in annual increments as of March 31 each year with
the final column detailing the present value discounting of the cash
flows at current market rates.
Table I
Fair Value of Financial Assets
Benchmark Bankshares, Inc.
March 31, 2003
Current
Categories 2004 2005 2006 2007 2008 Thereafter Value
---------- ---- ---- ---- ---- ---- ---------- -----
Loans
Commercial $ 8,830,127 $ - $ - $ - $ - $ - $ 8,369,789
Consumer 13,710,099 9,428,942 5,742,617 3,992,440 1,551,388 321,350 30,526,847
Mortgage 33,038,325 26,587,219 22,828,765 32,617,784 29,795,017 27,834,451 140,371,391
Investments
Municipals
Nontaxable 1,888,360 601,005 601,005 1,241,005 1,649,178 11,048,606 14,906,016
Taxable 61,693 556,572 31,450 31,450 31,450 578,625 1,058,279
Mortgage Backed
Securities 3,672,859 2,769,951 2,158,340 1,856,809 3,415,909 3,989,294 15,865,162
Page 15 of 21
Certificates of Deposit
< 182 days 3,173,166 - - - - - 3,161,306
182 - 364 days 10,864,988 - - - - - 10,790,700
1 year - 2 years 50,149,233 668,900 - - - - 49,932,805
2 years - 3 years 6,223,609 11,332,028 889,559 - - - 17,757,572
3 years - 4 years 5,348,427 2,817,545 4,503,591 2,583 - - 12,084,129
4 years - 5 years 743,878 819,714 699,499 786,599 - - 2,833,894
5 years and over 10,394,213 8,254,964 19,271,987 8,874,710 28,670,404 341,563 66,838,391
In Table Two, the cash flows are present value discounted by
predetermined factors to measure the impact on the financial products
portfolio at twelve month intervals.
Table II
Variable Interest Rate Disclosure
Benchmark Bankshares, Inc.
March 31, 2003
Valuation of Securities No Valuation of Securities
Given an Interest Rate Change In Given an Interest Rate
Decrease of (x) Basis Points Interest Increase of (x) Basis Points
Categories (200 BPS) (100 BPS) Rate 100 BPS 200 BPS
---------- --------- --------- ---- ------- -------
Loans
Commercial $ 8,531,524 $ 8,449,882 $ 8,369,789 $ 8,291,199 $ 8,214,072
Consumer 31,771,259 31,137,702 30,526,847 29,937,564 29,368,794
Mortgage 151,024,364 145,522,113 140,371,391 135,541,579 131,005,295
Investments
Municipals
Nontaxable 16,345,182 15,627,106 14,906,016 14,168,705 13,331,267
Taxable 1,132,937 1,094,156 1,058,279 1,025,201 994,814
Mortgage Backed Securities 16,942,540 16,403,853 15,865,162 15,326,472 14,787,786
Certificates of Deposit
< 182 days 3,185,105 3,173,166 3,161,306 3,149,525 3,137,822
182 - 364 days 10,940,098 10,858,201 10,790,700 10,723,869 10,657,698
1 year - 2 years 50,947,177 50,434,892 49,932,805 49,440,614 48,958,030
2 years - 3 years 18,366,589 18,057,744 17,757,572 17,465,741 17,181,935
3 years - 4 years 12,550,636 12,313,564 12,084,129 11,862,003 11,646,870
4 years - 5 years 2,974,908 2,903,025 2,833,894 2,767,379 2,703,350
5 years and over 71,481,044 69,102,557 66,838,391 64,681,739 62,626,268
Only financial instruments that do not have daily price adjustment capabilities
are herein presented.
Page 16 of 21
Form 10-Q
Benchmark Bankshares, Inc.
March 31, 2003
Part II Other Information
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
Independent Accountant's Review Report
Item 6 Report on Form 8-K
No reports on Form 8-K have been filed
during the quarter ended March 31, 2003.
Item 99 "Additional Exhibits of Item 601(b)"
Exhibit 1 Section 906 Certification
Exhibit 2 Section 302 Certification
Page 17 of 21
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
Board of Directors
Benchmark Bankshares, Inc.
Kenbridge, Virginia
We have reviewed the accompanying 10Q filing including the balance
sheet of Benchmark Bankshares, Inc. (a corporation) as of March 31, 2003 and
the related statements of income and cash flows for the three month period then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of Benchmark Bankshares, Inc.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order for them
to be in conformity with generally accepted accounting principles.
Our review was made for the purpose of expressing limited assurance
that there are no material modifications that should be made to the financial
statements in order for them to be in conformity with generally accepted
accounting principles. The additional required information included in the
10-Q filing for March 31, 2003 is presented only for supplementary analysis
purposes. Such information has been subjected to the inquiry and analytical
procedures applied in the review of the basic financial statements, and we are
not aware of any material modifications that should be made thereto.
Creedle, Jones, and Alga, P. C.
Certified Public Accountants
South Hill, Virginia
May 7, 2003
Page 18 of 21
Exhibit 1
STATEMENT OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Form 10-Q of Benchmark Bankshares, Inc. for the
quarter ended March 31, 2003, we, Ben L. Watson, III, President and Chief
Executive Officer of Benchmark Bankshares, Inc., and Janice W. Pernell, Senior
Vice President, Treasurer, and Assistant Secretary of Benchmark Bankshares,
Inc., hereby certify pursuant to 18 U.S.C.ss.1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge:
(a) such Form 10-Q for the quarter ended March 31, 2003 fully
complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934, as amended; and
(b) the information contained in such Form 10-Q for the quarter
ended March 31, 2003 fairly presents, in all material
respects, the financial condition and results of operations
of Benchmark Bankshares, Inc. as of, and for, the period
presented in such Form 10-Q.
By: Ben L. Watson, III Date: May 7, 2003
President and Chief Executive Officer
By: Janice W. Pernell Date: May 7, 2003
Senior Vice President, Treasurer,
and Assistant Secretary
Page 19 of 21
Exhibit 2
Section 302 Certification
I, Ben L. Watson, III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Benchmark Bankshares, Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
Board of Directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize, and report financial data and have
identified for the registrant's auditors any
material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 7, 2003 Ben L. Watson, III
President and Chief Executive Officer
Page 20 of 21
Exhibit 2
Section 302 Certification
I, Janice W. Pernell, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Benchmark Bankshares, Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such
statements were made, not misleading with respect to the
period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
Board of Directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize, and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 7, 2003 Janice W. Pernell
Senior Vice President, Treasurer, and
Assistant Secretary
Page 21 of 21
Form 10-Q
Benchmark Bankshares, Inc.
March 31, 2003
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Benchmark Bankshares, Inc.
(Registrant)
Date: May 7, 2003 Ben L. Watson, III
------------------
President and CEO
Date: May 7, 2003 Janice W. Pernell
-----------------
Senior Vice President, Treasurer,
and Assistant Secretary